Wriiight

10 More Notes for the Current Crisis

"Consider ... Fannie Mae (FNM). Where does the bailout end?"

Or possibly, 'When does the bailout start'? For the GSEs haven't drawn upon their $100B as of yet. So far they still have the cash to lock away in their loan-loss reserves and their current operations are profitable. The future cost of projected loss weigh heavily upon their future outlook, but there is still hope to pull through. If you examine the numbers Fannie put out yesterday, you will see the bulk of their losses come from losing the ability to use their tax credits and from having to stock away more money into their loan loss reserve account as their projected future losses are adjusted higher. The GSEs are not quite the disaster that AIG is.